Econintersect: Weak demand from China and Europe are badly hurting Japan’s export numbers which fell at an annual rate of 8.1% in July. Expectations had been for a much smaller decline of 2.9%, according to Reuters. Exports are an important component of Japan’s GDP which has been weakening in spite of increased spending over the past year in the recovery and rebuilding efforts after the March 11, 2011 megaquake and tsunami.
The slump in exports created a negative current account balance of $6.5 billion which is a subtraction from GDP. Economists have projected that Japan’s GDP growth will be 2.2% for the fiscal year ending March 2013. This may be hard to achieve. Just a week ago the preliminary GDP growth estimate for the quarter ending in June came in at an unexpectedly low 1.4%. That was with a small positive contribution from trade which has now turned negative.
According to Reuters other Asian countries are also suffering from reduced exports:
Data from South Korea and Taiwan suggested little let up in the exports pressure.
In the first 20 days of August, South Korea’s exports fell 12.4 percent from a year earlier, leaving a $4.5 billion trade deficit for the period.
Orders for Taiwan’s exports, a forward indicator of demand, slumped 4.4 percent in July over the previous year, far more than expected.
- Japan exports slump on Europe, China; raise global demand worries (Leika Kihara and Stanley White, Reuters, 22 August 2012)
- Japan: GDP Growth Slows Unexpectedly (GEI News, 13 August 2012)